How do I calculate cost basis for GE stock spin offs after inheritance?

Thanks for explaining. So if the GE shares were worth $50k at time of death, and after the spinoff the original GE was 80% of the value and each of the two spinoffs were 10%, would the cost basis be $40k for GE and $5k for each spinoff? Also do you know if I have to do separate calculations for each time I received a dividend reinvestment over the years?

Your understanding is exactly right. If the GE shares were worth $50k at time of death, and after the spinoff the value proportions were 80% GE and 10% for each spinoff, then your allocated basis would be $40k for the GE shares and $5k for each of the spinoffs. For dividend reinvestments, those are actually separate purchases with different cost bases. Each time dividends were reinvested, those new shares have their own cost basis equal to the market value on the reinvestment date. You'll need to track each reinvestment separately, which is why many investors appreciate brokerages that provide detailed cost basis tracking.

That sounds too good to be true. Does it actually work with complicated situations? My grandmother left me Disney stock from the 70s with tons of splits and spinoffs, and I've been putting off dealing with it for this exact reason.

I'm skeptical about these online calculators. How does it handle situations where the company doesn't publish clear allocation percentages? Also, does it account for wash sales if you bought additional shares around the same time?

Yes, it definitely works with complicated situations. The system has historical data going back decades and handles multiple splits, spinoffs, and mergers - even for stocks held since the 70s like your Disney shares. It's specifically designed for these complex inheritance scenarios. The tool actually has built-in data for cases where companies didn't publish clear allocation percentages. It uses historical market data to calculate fair market value proportions. And yes, it does flag potential wash sales if you bought additional shares within the 30-day window and even helps segregate those transactions for proper tax treatment.

How exactly does this work? Do they just keep calling on your behalf until they get through? I've tried calling the IRS 15 times about a similar stock basis issue and can never get past the automated system.

This sounds like a scam. Why would I pay a service to make phone calls I can make myself? GE investor relations information is publicly available on their website. Seems like a waste of money for something that should be free.

It uses a system that essentially keeps your place in line without you having to stay on hold. They have access to special dial-in numbers and scheduling technology that monitors wait times, and then they call you once they've navigated through the phone tree and have a representative ready to talk. It's not just for the IRS - works for any customer service line with long hold times. No, it's definitely not a scam. I was skeptical too, but the time saved was absolutely worth it. While some information is on GE's website, the specific allocation percentages for older spinoffs and the historical Form 8937 documents I needed weren't easily accessible. Sometimes you need to speak to a specialist, and getting through to one can be nearly impossible without assistance.

I actually did check with the brokerage first - they have the basis for recent transactions but said anything before 2011 (when the mandatory cost basis reporting began) is my responsibility to calculate. Unfortunately, all my inherited shares fall into that category. They suggested I might need to hire a specialized accountant to figure it out, which seems excessive.

That's frustrating but unfortunately common. The 2011 cutoff for mandatory reporting leaves a lot of long-term investors with homework to do. Before hiring an accountant, try contacting GE's investor relations directly - they should have records of all historical spinoffs and the allocation percentages that were used. Also, if you have any old statements showing the original share count and value at inheritance, make sure to keep those. The documentation will be important if you're ever audited, especially for inherited assets where the IRS might question your stepped-up basis calculations.

Is there any benefit to using average cost method instead of specific identification for inherited stock? My broker keeps pushing me to use average cost but won't explain why.

Average cost method is generally simpler for brokers to calculate and track, which is probably why yours is pushing it. However, for inherited stock with spinoffs, specific identification gives you much more control over your tax situation. With inherited shares, you get a stepped-up basis to fair market value at death, which is usually advantageous. If you later have dividend reinvestments or additional purchases at different prices, specific ID lets you choose to sell the lots with the highest basis first to minimize capital gains. Average cost would blend all your basis amounts together, potentially forcing you to recognize more gains than necessary. For complex situations like yours with GE spinoffs, definitely stick with specific identification.

This is such great advice about checking with the UTMA custodian first! I'm new to dealing with inherited stock issues, but reading through this entire thread has been really educational. It's amazing how complex something that seems straightforward can become when you factor in decades of corporate actions. I'm curious - for those of you who have been through this process, how long did it typically take from start to finish to get all the cost basis information sorted out and complete the transfer? I'm trying to set realistic expectations for myself since it sounds like there might be multiple steps involving different organizations and potentially some waiting for documentation. Also, the point about precise dates is really important. I hadn't thought about how the exact timing could affect valuations, especially for inherited securities. Thanks for sharing your experience!

@Ravi Gupta Great question about timing! From my experience helping family members with similar situations, it typically takes anywhere from 2-6 weeks to gather all the documentation and complete the transfer, depending on how responsive the various companies are. The longest part is usually waiting for historical documents from investor relations departments - some companies respond within a few days, while others can take 2-3 weeks. If you use one of the online tools mentioned earlier in the thread, that can speed things up significantly since they already have much of the historical data compiled. For the actual brokerage transfer once you have all the cost basis information, that s'usually pretty quick - most major brokers can complete UTMA transfers within 5-10 business days. The key is having all your documentation organized before you start the transfer process. One tip: if you re'dealing with multiple spinoffs like the original poster, consider tackling them one at a time rather than trying to research everything simultaneously. It s'less overwhelming and helps ensure you don t'miss any important details.

From my experience, the timeline can vary quite a bit depending on how responsive the various parties are. If you have most of your documentation already and the company's investor relations department is helpful, you might be able to get everything sorted in 2-3 weeks. However, if you need to track down historical records or wait for forms from multiple companies (like with complex spinoff situations), it could easily take 6-8 weeks or longer. The key is to start gathering documentation early and work on multiple fronts simultaneously - contact the company's investor relations for Form 8937, request historical statements from your current custodian, and research your new brokerage's requirements for inherited stock transfers all at the same time rather than doing them sequentially. One thing that helped me was creating a checklist of all the documents I needed and tracking the status of each request. It kept me organized and helped me follow up appropriately when things were taking longer than expected. The peace of mind from having everything properly documented was definitely worth the effort!

Great question @Ravi Gupta! From my experience helping family members through similar situations, the timeline can vary quite a bit depending on how organized your records are and which resources you use. If you have most of your documentation already and use one of the online tools mentioned earlier (like taxr.ai), you might be able to get everything sorted in a few days to a week. However, if you need to track down historical corporate action documents or work directly with multiple investor relations departments, it could take several weeks to a couple of months. The key factors that affect timing are: 1) How many spinoffs/corporate actions you're dealing with, 2) Whether your current custodian has any historical records to provide, 3) How responsive the companies' investor relations departments are, and 4) Whether you need professional help to review the calculations. My advice would be to start the process as soon as possible and work on gathering documentation while you're deciding on your new brokerage. That way you can have everything ready for a smooth transfer once you've completed the cost basis calculations. The peace of mind from having accurate records is definitely worth the effort upfront!

Great question about timing @Ravi Gupta! From my experience, the entire process took about 6-8 weeks from start to finish. The biggest time consumers were waiting for historical documentation from the company's investor relations department (about 2-3 weeks) and then having my tax professional review everything before finalizing the transfer paperwork. If you use one of the online tools mentioned earlier in the thread, that could potentially speed things up significantly. But I'd still recommend building in extra time for any back-and-forth with your new brokerage to make sure they set up the cost basis tracking correctly for all the different lots. One tip that helped me stay organized was creating a simple checklist of all the documents I needed to gather - original inheritance paperwork, death certificate, historical statements, Form 8937s for each spinoff, etc. Having everything laid out visually made it easier to track my progress and identify what I was still waiting for. The precise dating issue @Kingston Bellamy mentioned is really important. I learned that some spinoffs use the ex-dividend "date for" valuation purposes while others use the actual distribution date, so make sure you re'using the right date when looking up historical prices for your calculations.